Discovery files petition against TRAI’s latest consultation paper in Delhi High Court

Discovery Communications, India’s largest reality and infotainment broadcaster, has filed a petition in the Delhi High Court against The Telecom Regulatory Authority of India (Trai), seeking to quash the regulator’s latest consultation paper, terming it “illegal and lacking in objectivity, transparency and fairness of approach.”

This marks the second time Discovery has taken TRAI to court over its new regulatory framework, which comprises of the Interconnect Regulations 2017, Quality of Standards Regulations, 2017 and Tariff Order, 2017.

In its 239-paged petition dated August 28, Discovery has taken on the Trai’s consultation paper dated August 16, which attempts at reviewing the New Tariff Order (NTO), only seven months into its implementation, in a bid to cut channel prices. Discovery has argued that the Trai’s consultation paper has a “pre-mediated approach” to hold broadcasters responsible for manipulating prices and kerbing consumer choice.

“The Impugned consultation paper fails to conform to the fundamental tenets of transparency and objectivity by proceeding with a pre-determined notion that channel broadcasters, including the petitioner (Discovery), have distorted the broadcasting market and consumer choice through perverse pricing and deep discounting and have therefore called for suggestions on the ways and means to remedy the situation,” reads the petition.

The petition has alleged that the regulator has already made up its mind to align individual channel prices with bouquet prices and therefore the entire consultation exercise, conducted with a “close-mind at the state of consultation itself” is merely an “idle ceremony”.

Discovery has also challenged that the consultation paper is a “flagrant attempt” by the Trai to “defeat and obfuscate” the broadcaster’s earlier petition which is at the final stage of hearing. By “proceeding on assumptions as if they were conclusive evidence of market distortion…when the sanctity of these same-self assumptions are a subject matter of challenge before the HC”, Discovery has argued that the regulator is attempting to “pre-empt the outcome of the judicial proceedings”.

In August 2017, Bharti Telemedia, the holding company of Airtel Digital TV, Sun Direct, Tata Sky and Discovery Communications had filed a petition against the Trai, on the grounds that the new regulatory framework was “arbitrary, discriminatory and failed to address subscriber interest”. The final hearing of this original petition is scheduled on September 19.

Elaborating on the three main issues that Discovery says the Trai is attempting to “obfuscate” through its consultation paper, the petition states that the regulations allow distribution platform operators (DPOs) to discontinue any channel having less than 5 percent of the average viewership of the DPO. This, the petition argues, amounts to restriction of carriage rights of niche channels having limited viewership.

Discovery Communications, which offers a variety of niche programming channels including Discovery Channel, Discovery Science, Discovery Kids, Animal Planet and TLC, has a limited viewership in India, with a television share of 0.75 percent across its genres.

Discovery has also argued that Trai’s assumption that the unreasonable amounts of discounts offered by broadcasters’ results in “illusionary perverse pricing affecting consumer choice” is “without any basis” and not based on any study.

In its consultation paper, the Trai came down heavily on broadcasters for offering bouquets at a 70 percent discount to the sum of the same channels on an a-la-carte basis, thereby “forcing” consumers to opt for bouquets instead of picking individual channels of their choice. The regulator has accused broadcasters and DPOs of “throttling the market discovery” of prices through deep discounting of channel bouquets.

Discovery has also hit out at the Trai’s conclusion that DPOs are not availing a-la carte channels due to high costs compared to bouquets, stating the conclusion does not consider any “economic or empirical data.”

Discovery argues that while the three issues are not founded on any scientific or market study and are awaiting adjudication, by introducing a consultation paper at this stage, the Trai is trying to avoid the adjudication process by rendering the original writ petition infructuous.

Discovery also points out that to demarcate channels that have low viewership as unpopular channels does not speak to the mandate of an economic regulator such as Trai, which is acting on social grounds. It has also pointed that the new regulatory framework has accorded substantial power to distribution platforms which try to maximise revenues by pushing popular channels, leaving broadcasters at their “sole mercy.”

On the issue of the capping of discounts on bouquets, the petition states that Trai is attempting to “override and disregard” the verdict of the Madras HC and the Supreme Court by reintroducing the same issue in its consultation paper. The Madras HC, in a verdict on May 23, 2018 had struck down Regulation 3(3) of the Tariff Order which provided for a 15 percent cap on the discount offered on a bouquet vis-a-vis the sum of the a-la-carte channels forming that bouquet. The verdict of the Madras HC was upheld by the SC in December 2018.

With Discovery knocking on the High Court’s doors, Trai could see more legal action from other incumbents in the broadcasting industry. The broadcasting industry has been up in arms against the latest consultation paper which they see as an attempt to control prices. The Indian Broadcasting Foundation, which released a media statement last week, said the regulator’s latest move could have “disastrous consequences” for the broadcasting sector, forcing small and niche players to fold up, eroding capital for content creation and drying up advertising revenues.